Fake windows system restore virus.. help!

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braz

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My friend's laptop is infected with this fake system restore virus. This scan pop ups when you start up the laptop saying there are all of these RAM errors and a bunch of other junk. It also has hidden every file, desktop icon-everything. I have googled it, it is a common virus. I put spybot on a flashdrive, ran it in safe mode and still found nothing surprisingly. I am currently running it normally and waiting for the results. Could anyone help me remove this without having to do a format? I am shocked that spybot did not find it in safe mode!
 
Yes if possible.

Remember to disable system restore points, remove temp files and umm, maybe post this in the virus section next time? XD
 
Sorry! didn't mean to post here! Ok... so it found 12 infections, I removed them all... but now when it restarts there is just a pink screen (I think it used to be part of her wallpaper) and I have a mouse and that is it. No start button, can't right click-nothing. I can hit cntrl alt delte though and get the task manager up, but that is it! By the way it is windows vista. I tried doing repair in the boot options but there is nothing. What can I do to restore the regular function of windows???
 
Aha!!! it worked! You are a life saver, I appreciate everyone's help! Time to clean this laptop up and install AVG on it!!
 
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